France details plans for ‘carbon inclusion mechanism’

A campaign led by French President Nicolas Sarkozy to introduce carbon tariffs at EU borders in order to restore fair competition with freely-polluting industries in China is being revamped in Brussels to allay fears that it might trigger a trade war.

The proposed system, called a "carbon inclusion mechanism," would require importers of goods manufactured outside Europe to buy pollution permits from the EU’s emissions trading scheme for carbon dioxide (EU-ETS).

French diplomats say the system would only be used as a last resort and should work as a lever to force emerging economies like China, India and Brazil back on the negotiating table after the failure of international climate talks in Copenhagen last year.

"The mechanism, which responds first and foremost to an environmental objective within the framework of the international negotiation on climate change, would seek only to preserve current competitive conditions" in industries such as steelmaking, reads a briefing note circulated by the French Permanent Representation to the EU in Brussels.

"From a technical point of view, it would not amount to a border tax."

To prove the proposal is not intended as a protectionist measure, Paris says the money could even be reserved to fund low-carbon technologies in developing countries.

Poor countries in Africa and elsewhere, which come under a different approach, would be exempted from the proposed mechanism.